EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

04.19.10

The SEC is Going After Microsoft (Again), Not Just Goldman Sachs

Posted in Finance, Fraud, Microsoft, Search, Steve Ballmer at 6:49 am by Dr. Roy Schestowitz

US Securities and Exchange Commission Seal

Summary: The SEC (U.S. Securities and Exchange Commission) contacts Steve Ballmer regarding oddities in Microsoft’s latest financial report

WE WISH to begin with factual background that a lot of people are unaware of. A few months ago, right around the time that Microsoft's CFO quit he was also paid millions of dollars by Microsoft to keep his mouth shut. This is not a standard transaction. This could indicate malpractice and there is reason for prejudice because the SEC previously caught and investigated Microsoft for financial fraud (Microsoft eventually settled), after a Microsoft employee, Charles Pancerzewski, had blown the whistle and presented to the judge convincing evidence of fraud taking place at Microsoft. Microsoft paid Pancerzewski millions of dollars to shut him up and eliminate his evidence [1, 2]. It’s a typical maneuver from Microsoft, which also hires/pays critics to walk away and not share their knowledge with the public. We gave several examples of this before.

A few days ago we wrote about Microsoft’s close relationship with US banks/the Fed, which are aflood with misconduct these days. They contact Microsoft for help brainwashing the public [1, 2, 3, 4, 5, 6, 7, 8, 9], as we noted some days ago when we wrote about the SEC suing Goldman Sachs for fraud. For those who have not read that previous post, Microsoft’s CEO was asked to create a seasonly game to teach the public about deficit crunching (Microsoft too has debt) and as this new article shows, using games to brainwash minds is not out of the ordinary (war games are the most famous example).

PepsiCo International and Microsoft have teamed up to create an integrated digital advergaming campaign to take advantage of what’s expected to be increasing interest in soccer as the World Cup gets underway.

But anyway, here is the interesting development. Pogson has found this document [PDF] buried inside the SEC’s Web site. Since it is available as a PDF, we decided to append it at the bottom as plain text. Microsoft’s response is an HTML-formatted mail and here is what Pogson makes of it:

Then, in the last quarterly report, M$ combined that other OS and “live” segments. I guess they thought a zigzag in the curve would hide something like the inflection in the client OS stuff. Further, internally, they use a different set of books, omitting some important details. So, investors should be comforted knowing that internal decisions are made on false assumptions. We have known for years that including the browser in the OS was done not for good business reasons but to exclude competition from the market. I guess that other search engine is more of the same.

There is actually more to it because Microsoft is ‘embellishing’ its numbers by deferring revenue, for example [1, 2, 3, 4]. One writer asks about Microsoft: “Are we seeing a revival?” Well, only if Microsoft’s lies are being believed because in the previous quarter just about any business unit at Microsoft was down. Yes, it was mostly down, but Microsoft claims a surge.

Let me be clear. I’m not a fan of Microsoft (NASDAQ:MSFT). I dislike its products and I don’t much like its business policies. I’m a child of the open source world and a fan of cloud computing, and Microsoft has long been a dirty word as far as I’m concerned. It’s probably a dirty word as far as many investors are concerned.

Wallstcheatsheet.com, which is another news site, has just published the article “Proof Microsoft has Become Irrelevant” and it says:

If this keeps up [for Bing] , Microsoft may want to rename it ‘Ding’ because that’s how big an impact they’ve had in the search space.

For the moment, Kin and Bing are not making huge waves.

We wrote about it in the previous post. Bing as a “success” is part of an illusion Microsoft is spreading and Kin is a major disappointment which we’ll address in the next post. There is more to Microsoft’s financial reports than meets the eye. Don’t believe what you see next week when Microsoft releases another report and immediately spins it as “success”. Microsoft is not honest about its financial situation.



Mail Stop 4561
                                                             December 11, 2009
Mr. Steven A. Ballmer
Director and Chief Executive Officer
Microsoft Corporation
One Microsoft Way,
Redmond, Washington 98052-6399

        Re:    Microsoft Corporation
               Form 10-K for the Fiscal Year Ended June 30, 2009
               Filed July 30, 2009
               01-14278

Dear Mr. Ballmer:
        We have reviewed the above-referenced filing and have the following comments.
Please be as detailed as necessary in your explanation. After reviewing this information,
we may raise additional comments.

        Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our
review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for the Fiscal Year Ended June 30, 2009
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Segment Product Revenue/Operating Income (Loss)
Online Services Business, page 25

1.      We note that the operating loss for your Online Services Business increased by
        102% and 84% in 2008 and 2009, respectively, and is a significant portion of your


Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 2 consolidated operating income in 2009. Tell us whether these increasing losses are indicative of future results and the consideration given to identifying and quantifying any related known trends, events and uncertainties that would reasonably be expected to have a material impact on your liquidity, capital resources and/or results of operations. Refer to Item 303(A) (3) (ii) of Regulation S-K and Section III.B.3 of SEC Release 34-48960. Item 8. Financial Statements and Supplementary Data Note 22. Segment Information and Geographic Data, page 77 2. Tell us what consideration you gave to reporting revenue from external customers for each of your products and services or each group of similar product and services in accordance with paragraph 37 of SFAS 131. 3. You indicate that your financial reporting systems provide more than one measure of segment profit and loss for management to operate the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Tell us what consideration you gave to reporting the segment information that is most consistent with that used in your consolidated financial statements. In this regard, we note that the segment information provided beginning on page 23 is presented in accordance with U.S. GAAP. Refer to paragraph 30 of SFAS 131. 4. We note your statement that segments are not designed to measure operating income or loss directly related to the products included in each segment, due to your integrated business structure. Further explain this assertion and tell us what operating costs are excluded from each segment. In light of this apparent limitation of the data, indicate how the segment information presented is reliable and relevant to users of your financial statements. 5. You state that “inter-segment cost commissions are estimated by management and used to compensate or charge each segment for such shared costs and to incent shared efforts.” Clarify for us what is meant by these estimated inter-segment cost commissions and tell us what consideration you gave to describing in the note the basis of measuring this allocation. Also, clarify what is meant by allocating cost commission “to incent shared efforts.” Explain your basis for determining the appropriate amounts that will provide motivation and justify why management believes the allocation methodology is reasonable. Refer to paragraphs 25(b) and 29 of SFAS 131. ******* Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please submit all correspondence and supplemental
Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 3 materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your filing, you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter that keys your response to our comments and provides any requested information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing any amendment and your response to our comments. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all information required under the Securities Exchange Act of 1934 and that they have provided all information investors require for an informed investment decision. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclosure in the filing; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and • the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corporation Finance in our review of your filing or in response to our comments on your filing. You may contact Melissa Walsh, Staff Accountant, at (202) 551-3224 if you have any questions regarding comments on the financial statements and related matters. If you need further assistance, you may contact me at (202) 551-3226 Sincerely, Craig D. Wilson Sr. Asst. Chief Accountant

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

2 Comments

  1. your_friend said,

    April 21, 2010 at 6:55 pm

    Gravatar

    It’s about time the SEC got on Microsoft and their letter is quite a slap down on the usual monkey business. Well done, SEC, please follow up.

  2. uberVU - social comments said,

    April 25, 2010 at 9:21 am

    Social comments and analytics for this post…

    This post was mentioned on Identica by schestowitz: The #SEC is Going After #Microsoft (Again), Not Just #GoldmanSachs http://ur1.ca/vvaf #finance #fraud #regulation #steveballmer…

What Else is New


  1. Another Misleading Article Regarding Patents From Rana Foroohar at the Financial Times

    In an effort to promote the agenda of patent maximalists, many of whom are connected to the Financial Times, another deceiving report comes out



  2. Monika Ermert's Reports About the Crisis at the EPO and IP Kat's Uncharacteristically Shallow Coverage

    News from inside the Council shows conflict regarding the quality of European Patents (granted by the EPO under pressure from top-level management)



  3. Patent Troll VirnetX a Reminder to Apple That Software Patents Are a Threat to Apple Too

    VirnetX, a notorious patent troll, is poised to receive a huge sum of money from Apple and Qualcomm is trying to ban Apple products, serving to remind Apple of the detrimental impact of patents on Apple itself



  4. Links 16/10/2017: Linux 4.14 RC5, Debian 9.2.1, End of LibreOffice Conference 2017

    Links for the day



  5. The Systematic Erosion of Workers' Rights and Holidays at the EPO Goes Years Back

    The legitimacy of the staff's concerns at the EPO, having seen basic labour safeguards being shredded to pieces by Battistelli for a number of years (predating even the escalation of the conflict)



  6. Articles in English and German Speak About the Decline in Quality of European Patents (Granted by the EPO)

    Heise and The Register, two sites that have closely watched EPO affairs for a number of years, speak about the real problem which is declining patent quality (or rushed examination) -- a recipe for frivolous litigation in Europe



  7. Software Patents and Patent Trolls Not a Solved Issue, But the US is Getting There

    A media survey regarding software patents, which are being rejected in the US in spite of all the spin from law firms and bullies such as IBM



  8. US Patent Trolls Are Leaving and the Eastern District of Texas Sees Patent Cases Falling by More Than Half

    The decline of patent aggression in the US and the patent microcosm's response to Justices, having ruled in TC Heartland, curtailing patent trolls



  9. Qualcomm's Nightmares Are Getting Worse as Antitrust Questions Are Raised and Assessed

    Qualcomm is getting itself deeper in trouble as fines pile up and its multi-billion dollar dispute with Apple isn't getting it anywhere



  10. Forget About Apple; Two of the Leading Phone Makers (Samsung and Huawei) Are Bickering Over Patents

    Massive Android OEMs, Huawei and Samsung, are in a big patent dispute and this time, for a change, China is a legal battleground



  11. Tim Heberden From the Glasshouse Advisory is Throwing Stones in a Glasshouse to Create Patent Litigation

    IAM's latest lobbying, aided by the patent microcosm, for a climate of feuds and disputes (to line the pockets of the litigation 'industry')



  12. Access to Medicine is More Important Than Patents

    Some of the latest news about patents that impede/deny access to crucial medication; strategic litigation from the generics sector, seeking to invalidate patents and then offer low-cost alternatives



  13. Links 14/10/2017: Windows Breaks Dutch Law, Wine 2.19 Released

    Links for the day



  14. The Patent Trial and Appeal Board (PTAB) Supported by Congress, a Federal Judge, Soon to be Supported by the Supreme Court Too?

    The Patent Trial and Appeal Board is still widely defended, except by the patent microcosm which likes (and profits from) patent trolls and litigation Armageddon



  15. Patents Are Turning BlackBerry and Nokia, Which Used Android, Into Anti-Android Fronts That Tax Android OEMs

    The Canadian BlackBerry has sued BLU in the US only to compel it to pay 'protection' money; Nokia's patents are being scattered to trolls, which are doing something similar (without risking litigation themselves)



  16. The Unified Patent Court (UPC) is Rotting Like the European Patent Office

    The Unitary Patent litigation pipe dreams (or prosecution/trolling fast lane), which Battistelli's EPO long relied on, turn out to be the road to nowhere



  17. Lying and Faking Now a Standard Procedure at the European Patent Office

    The European Patent Organisation (EPO) under the leadership (or chairmanship) of Christoph Ernst continues to relay lies from Battistelli's Office, SUEPO rejects these, the Office lies about SMEs, prioritises Microsoft (again), and probably buys fake Twitter "followers"



  18. Links 13/10/2017: X.Org Server 1.19.5, pfSense 2.4, Final Stages of Ubuntu 17.10

    Links for the day



  19. Truly Terrible 'Journalism' About António Campinos Boils Down to Lobbying and Agenda-Pushing

    The expectedly shallow coverage of the appointment (succession) of Battistelli's French pick, which will likely change nothing of significance at the European Patent Office (EPO)



  20. Under Christoph Ernst, the Council is Just a Megaphone of Battistelli's EPO, Including on Patent Quality

    The Administrative Council of the EPO does not appear to be interested in a serious, adult, scientific debate about the quality of European Patents (EPs) and is instead relaying lies from Benoît Battistelli



  21. Links 12/10/2017: Cutelyst 1.9.0, Qt Creator 4.5 Beta

    Links for the day



  22. The Hogwash Begins: Patent Microcosm's Media Pretends Campinos is Anything But Battistelli's French Succession Plan

    A survey of media coverage regarding António Campinos, the French person whom Benoît Battistelli selected as his successor at the EPO



  23. Patent Quality at the EPO (European Patents) is Slipping While Battistelli's Office Boasts “Expansion of Early Certainty” (Even Worse)

    The EPO is staring down the abyss as high-level EPO management, quite frankly as usual, looks for new ways to further exacerbate patent quality (for superficial gains in the number of granted patents) rather than improve it



  24. Former Microsoft Employee Explains Why Microsoft 'Embrace' of GNU/Linux and Free/Libre Open Source Software is Like W3C Entryism

    Microsoft's latest moves are "EEE" that "concern" him, according to this new video



  25. Links 11/10/2017: Krita 3.3.1, KDE Plasma 5.12 Plans

    Links for the day



  26. China is Getting Full of -- and Fed Up With -- Patent Trolls

    In China too, as expected, local companies are becoming rather disgusted by a wave of patent trolls, enabled by misguided officials and bad advice from the likes of IAM (which sets up events in China at the behest of the patent microcosm)



  27. The FRAND Lobby is Trying to Sneak Software Patents Into Countries That Banned Them

    The patent lobby is attempting to find new ways to impose patents on software (with euphemisms like "reasonable", "non-discriminatory" or "fair"), even in places that explicitly disallow these



  28. Musical Chairs as Battistelli's 'Chinchilla' García-Escudero Márquez Could Reportedly Take António Campinos' Place

    A culture of nepotism continues to thrive at the EPO, with García-Escudero Márquez rumoured to be after Campinos' position now that he's taking Battistelli's position; García-Escudero Márquez is also Battistelli's 'chinchilla' at the appeal boards, obliterating any illusion of independence



  29. With Surveillance Recruits at the EPO, Are (or Were) DNA Tests Ever on the Agenda?

    Since a lot of what's happening at WIPO has also happened at the EPO, and overlap between the two is growing, we recall tactics which are illegal but are miraculously protected by the veil of immunity



  30. Links 10/10/2017: Plasma 5.11, GCC 5.5 Released

    Links for the day


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts